White (intel) iMac will not boot

Forgive the length of this post, I wanted to be as specific as possible after trying every fix possible in every forum I could find.

My friend gave me his old 24" white intel based iMac because it died on him and the "geniuses" told him that the logic board was dead. I figured I would try a few things out before I sold it for parts and here is what I found out.

1. The iMac would boot into safe mode without any problems, I ran disk utility, verified and repaired but it found no issues.
2. It would boot into single user mode, fsck found no problems
3. It will boot from my aluminum iMac's system specific 10.4 cd (obviously I couldnt install, but I could access and use the disk utility)
4. Holding down option while booting brought up the list of bootable devices.
5. It WILL NOT boot from a retail 10.5 DVD although the DVD will mount while in safe mode.
6. It WILL NOT boot from my Disk Warrior CD
7. It will boot to, and install from, a UBUNTU CD

So those are the basics. When I try to boot from a Leopard DVD I get the apple logo on the gray screen, the spinning icon below it and then it goes to a blue screen that turns to a light blue screen with the mouse up in the top left corner. I can move the mouse around but nothing loads past that blank blue screen. When I boot holding option, I will get the boot device list and can see the Leopard DVD, I choose it and it still goes to that blank blue screen.

I figured that since I dont care about any of the info on the HDD, I would just wipe it. So I booted from my 10.4 cd, and used disk utility to Zero out the drive, and then I partitioned it and rebooted. Nothing changed, except that there is no longer an OS to safe boot into. I have tried resetting the pram, and booting straight to the cd by holding c, but nothing changes.

So I took the hard drive out to see if it would boot from anything. With no hard drive connected it will still boot from my 10.4 cd, and UBUNTU, but I still get that same blank blue screen when I try and boot with the Leopard DVD.

I am at a loss for what to do, is this indeed an issue with the logic board? If so, why did safe mode work find, and UBUNTU install and run without issue? Any help would be greatly appreciated, I would really love to get this thing working.

If it matters, before I wiped the drive, 10.5.1 was installed, and I know that at one point shortly before it died, he had tried to remove a Windows partition.

-UPDATE-
I reinstalled Leopard via target disk mode, and again it will boot into safe mode but not normally.

After this it goes to the blank gray screen and hangs there until I reboot. However, when I look in the system log under "All Messages," I see that after that kernal warning (during the gray screen), this error appears about 1500 times (in less than 2 minutes), non-stop until I reboot:

I did run the hardware test, both the quick and the extended (whatever its called),and they showed no errors. I will check out that post though, thanks for the link, I think I should be able to do that in safe mode. I may not get to it til tomorrow, but I will post what happens.

*Edit*
I'm an idiot, its Snow Leopard that I have installed, not Leopard.

Thanks for your help deus ex machina, sadly that link you posted wont work for me. I think that I am just going to give up and sell it for parts. Luckily it was free, and its not my main computer. Just a project that I dont have the skills to complete. Anyway, thanks again.